Canaccord Genuity software analyst Richard Davis this afternoon writes that investors may be headed for disappointment as a result of software reports brought down by a 9% drop in the Euro since the end of October. The companies most exposed to that currency shift, in his view, are Parametric Technology (PMTC), Oracle (ORCL), Autodesk (ADSK), [...]

Canaccord Genuity software analyst Richard Davis this afternoon writes that investors may be headed for disappointment as a result of software reports brought down by a 9% drop in the Euro since the end of October.

The companies most exposed to that currency shift, in his view, are Parametric Technology (PMTC), Oracle (ORCL), Autodesk (ADSK), Ansys (ANSS), and Bottomline Technologies (EPAY). Davis notes that it’s complicated to anticipate the exact impact on revenue of various companies, not just because exposure varies and currency fluctuates throughout each day, but also because of the different ways companies recognize revenue throughout a quarter. “If a company were 100% subscription, it would get 1.11% of revenues every day
for 90 days and the impact of the currency decline would be half of the decline point-to-point,” he writes.

One of the most important metrics for analysts to watch is deferred revenue, Davis concludes, because “Sequential growth in deferred revenues will be understated as balances are adjusted to reflect changes in currency. This would have a negative impact on “calculated” billings.”

Davis recommends four stocks that seem to him less at risk of the currency fluctuations. He has Buy ratings on Salesforce.com (CRM), Constant Contact (CTCT), Carbonite (CARB), and Monotype Imaging Holdings (TYPE).